New York's Big Hopes for Nano


By Stephen Baker The turf war is raging. Governors, university presidents, and technologists are in the fray, all eager to turn their home territories into the U.S. nanoelectronics capital. You don't need a scorecard for the two biggest players. Silicon Valley is a natural, boasting king of chips Intel (INTC), Stanford University, and the world's most vigorous venture-capital industry.

And let's not forget Texas. It has a high-tech hub in Austin, strong research facilities, thanks to the University of Texas and Rice University -- and a Texan in the White House. And then there's Albany.

Albany? That's right. New York's upstate capital is crashing the nano party big-time. Governor George Pataki has targeted nano as a key to economic growth in the region. He has pushed $750 million in state funding into nano projects, many of them focused on the semiconductor industry. And the area has received $7.25 billion in private investments, much of it coming from New York's leading tech company, IBM (IBM).

GLOBAL GIANTS. The result is a growing complex of nanotechnology labs and fabs along the upper Hudson. The latest component? On Jan. 5, Governor Pataki and Albany officials announced that Dutch chip-lithography powerhouse ASML Holding (ASML), joined by IBM, is building a new $400 million research center in Albany. It will be ASML's first large-scale research fab outside of Europe.

For Pataki, who's supporting the project with $75 million in state funds, this type of development promises high-tech jobs in upstate New York, a region badly hurt by the decline of giants such as Xerox (XRX) and Kodak (EK).

Albany's gambit to become a nano power came in 2002, when the state successfully wooed Sematech International, a leading semiconductor research consortium, to expand from its base in Austin and put its new, $403 million research center in upstate New York. The state chipped in $210 million for equipment, construction, and specialized tools.

BIDDING WARS. This raid stunned Texas' nanotech community, which had assumed Sematech would look to the Lone Star State for its continued expansion. "Texas had an awakening -- a slightly rude one," says Randy Goodall, Sematech's Austin-based associate director.

Since then, Albany has lured other semiconductor players. On Jan. 5, Pataki announced that IBM -- along with Sony (SNE), Toshiba, Samsung, Infineon (IFX), AMD (AMD), and Charter -- will spend $1.9 billion on nanoelectronics manufacturing and development in East Fishkill, N.Y.

Alain Kaloyeros, vice-president of the College of Nanoscale Science & Engineering at the University of Albany, predicts that states will continue to bid aggressively for nano dollars. "States are viewing nanotechnology as a platform to put in place a research and development infrastructure and to attract jobs," he says. Kaloyeros, who heads Albany's nanotech initiative, already has 500 people reporting to him, and the number is sure to grow.

CHIPS LEAD THE WAY. It's not surprising that New York looked to Austin for a model. When the Texas capital landed Sematech in 1986, it positioned itself as a center for semiconductor research -- the science at the very heart of computing. Since then, Austin has flowered as a tech hot spot, giving birth to Dell (DELL) and a host of smaller success stories.

The biggest nanotech investments are coming in electronics -- for obvious reasons. Semiconductor manufacturers are now working at such tiny scales that the production of most chips involves the manipulation of materials on a nano scale -- a nano being one-billionth of a meter. Nanotech encompasses engineering at between 1 and 100 nanometers, with the nodes in many of today's chips spaced at 90 nanometers. As the circuitry continues to shrink, chipmakers will need more help from new nanomaterials and control heat.

Now, the three semiconductor hot spots in the U.S. are jousting for the next big prize, a government research fab for nanoelectronics. "It's like in Casablanca when they say, 'Bring in the usual suspects'," says Kaloyeros. Intel, he says, is pushing hard for a Silicon Valley fab, Texas Instruments is lobbying for one in Texas, and IBM is promoting Albany.

Nano is breeding plenty of hot spots in other industries. Boston is a leader in nano lighting and energy technologies. San Diego stands at the junction between nano and biotech, a frontier for new medicines. But in electronics, Albany is a new nano force to be reckoned with. Baker is a senior writer for BusinessWeek in New York


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